Generac Shares Fall 2% as Q3 Revenue Misses Forecasts Despite Earnings Growth

Generac Holdings Inc. (NYSE:GNRC) shares declined 2.07% in pre-market trading on Wednesday after the power equipment manufacturer reported third-quarter 2026 revenue below analyst expectations, despite exceeding earnings forecasts and recording double-digit sales growth.

The company reported adjusted earnings per share of $2.54, above the consensus estimate of $2.43. Revenue increased 16% year over year to $1.29 billion, compared with $1.11 billion in the previous year, but fell short of analysts’ expectations of $1.32 billion.

Growth was supported by the company’s Commercial & Industrial business, including increased demand for data centre power equipment.

Commercial & Industrial Sales Increase 28%

Generac’s Commercial & Industrial (C&I) segment reported a 28% increase in quarterly sales to $552 million, supported by demand for power generation equipment.

Residential sales rose 9% to $743 million, contributing to the company’s overall revenue growth.

The backlog for data centre products reached approximately $4.5 billion, including a $2.4 billion supply agreement with Amazon.com covering deliveries scheduled for 2027 and 2028.

President and Chief Executive Officer Aaron Jagdfeld highlighted the contribution from commercial customers.

“I’m incredibly proud of our team’s efforts as our third quarter results reflect an all-time record for net sales as we continued to see tremendous momentum in our C&I segment during the third quarter with significant additional commitments from data center customers,” Jagdfeld said.

Adjusted EBITDA Rises as Margins Improve

Generac reported third-quarter adjusted EBITDA of $256 million, compared with $193 million in the corresponding period last year.

The adjusted EBITDA margin increased to 19.8% of net sales from 17.3%, reflecting improved operating profitability.

Gross profit margin also expanded to 39.9%, compared with 38.3% a year earlier, supported by favourable pricing and lower tariff costs.

Free cash flow increased to $132 million from $96 million in the third quarter of 2025.

The improvements in profitability and cash generation accompanied higher sales across both operating segments.

Generac Maintains Revenue Outlook and Raises Margin Guidance

For full-year 2026, Generac maintained its forecast for net sales growth in the mid-to-high teens percentage range.

The company raised the lower end of its adjusted EBITDA margin guidance to 20.5%, from 20.0% previously, while maintaining the upper end at 21.0%.

The revised margin outlook follows the improvement in third-quarter profitability and continued growth in the Commercial & Industrial business.

Generac’s data centre backlog, including the Amazon supply agreement, also provides visibility into equipment deliveries scheduled for future periods.

Generac Outlook

Generac’s third-quarter results showed continued revenue and earnings growth, although sales fell below market expectations.

Commercial & Industrial revenue increased 28%, while Residential sales rose 9%, contributing to record quarterly net sales of $1.29 billion.

The company also reported higher adjusted EBITDA, improved gross margins and increased free cash flow.

Generac maintained its full-year revenue growth forecast and raised the lower end of its profitability guidance, while its data centre backlog reached approximately $4.5 billion.

Shares declined 2.07% before the opening bell as investors assessed the revenue shortfall alongside the company’s improved earnings performance and outlook.

Generac Holdings stock price